North Vancouver Homes

Thursday, April 15, 2010

We
have all heard the warnings about "The Big One", which is destined to
cause massive damage to Vancouver and surrounding areas. Like others, I
interpreted this as reference to the risk we take living on or near the
San Andreas Fault, and the devastating earthquake which experts claim
could hit any minute. Now I'm convinced that "The Big One" more aptly
describes the long anticipated and often denied bursting of the
Vancouver and perhaps National real estate bubble.

A brief recap of 2008

Vancouver
has a history of being a boom bust market, with the most recent plunge
occurring in 2008. For those who have forgotten, according to RBC,
in the third quarter of 2007 Vancouver broke free of its past
limitations and became its most unaffordable ever! No, not 1981, the
year which everyone loves to hear campfire stories about, 2007.

What came next was thought by many well overdue. The US housing bubble burst years earlier and Vancouver's market was by far the most expensive in Canada, while not even nearly having the household income levels
to support it. Mortgage Rates began to inch up and finally the buyers
stopper buying. I was selling real estate at the time and I can tell you
first hand, in May things just shut down. You can see from the charts
below that listings soared and buyers vanished. The supply of housing
inventory went from about 3 months, to well over 20 months within half
of a year.

Inventory:

Sales

The
outlook was grim for our housing market as you can see with this clip
from Global news in 2008, prices were falling like a stone:

What
happened? Well, our buddies down south kind of coaxed the world into a
massive global recession and rates fell so fast and so hard that the
competitive 6.29% 5 year term dropped to well under 4% with variable
rates in the 2's. The massive global recession, stock market collapse
and surging unemployment were not enough to curb Vancouverites and
investors of their voracious appetite for real estate. The result..? In a
frenzy of sales activity prices raced up 20%, right back to their
previously unsustainable highs.

Parallels

Here
we are. April 2010 and we just reached another milestone. The price for
a detached single family home in Vancouver just eclipsed 1 million dollars. Bravo Vancouver! OK, enough celebrating...Let's lay our eyes on a few of these beauties.

With this Arbutus home you are sure to be the envy of your friends
SOLD: $1,700,000

Who wants Dunbar? You too can have your own little slice of heaven
SOLD: $1,920,000

Anyways,
we have prices right back up to where they were, and the kicker is the
listings are beginning to pile up again. Actually this time it's happening faster than in 2008. In the GVRD we currently have almost 16,000 homes listed for sale which is trending towards at least 1000, if not 2000 more homes for sale than the end of April 2008.

Current inventory level:Chart courtesy of Vibe

Sales
have also been on a tear. The sales numbers could come in as one of the
strongest Aprils on record. This would normally provide a weakness in
my assertion that housing prices will fall, but the rush from buyers can
be attributed to a few very good reasons, all bearish. The most serious
is rising mortgage rates. We have been spoiled by record low rates for
many years now and the consensus is that they will continue to climb as the Bank of Canada rises rates and bond yields increase. To top it all off we have the new CMHC rules and the ever popular HST is on its way.

The
point of this note is not to tell anyone to buy or not to buy, but to
counter all the bubble denying that has hit the media lately. The
interview with Will Dunning
(mortgage salesman) really irked me when Will blatantly denied a real
estate bubble by concluding that since there has been no speculation
(funny because Finance Minister Jim Flaherty disagreesas does REMAX) and there has been no risky lending (Canadian subprime problem) there is no bubble, thus we can all chill out.

Buying
real estate or anything worth hundreds of thousands dollars warrants
diligent research. This message is hardly comprehensive but hopefully it
can help someone make a more balanced purchasing decision. Don't buy
the hype!

Friday, January 23, 2009

Rather than post
a poll I figured I would post something new. So let's see how long I
can stretch out this simple question. Here I go...

The Vancouver
real estate market entered a severe slowdown in 2008. After a lacklustre
spring market we reached a point at which the slowing sales and
mounting inventory combined to end price gains. Prices have fallen every
month since April (Benchmark SFH) and the economy has gotten far weaker
since the "correction" began.

All things come to an end. The
bubble has burst, and we will recover. However with the economic
weakness bearing down on us, this year does not look good. Interest
rates are falling rapidly which is great news for our market.
Unfortunately, I don't think it's enough. There are far too many storm
clouds on the horizon, and we may have to weather an economic hurricane
before we see a rainbow.

Real estate has proven itself a tremendous value for long term wealth creation but it's not always the best time to buy.

How
do you think this will play out? Will we get a dead cat bounce this
spring? Will we flatline for a few years? We will rush to new price
highs this spring? You tell me.

Friday, November 28, 2008

This month really was the pits for Realtors and home sellers. REBGV home
sales are down about 70% compared with last November and the MOI has
roared to over 22 Months. Inventory has started to shrink and will
continue to reduce as we approach the year end. Now the speculation
begins as to how high the listing count will climb this spring.

Today
we are faced with 76% higher inventory than the same time last year
(19,524 v. 11,114). This number combined with the horrendous sales
numbers (915 v. 2884 last November) has stomped out any of the last few
burning embers of this market... Okay, that was a bit harsh but at
Novembers sales pace it would take over 22 months to clear out our
existing inventory v. 3.85 MOI in Nov. 2007. Wow, what a different
market.

The good news is that affordability is improving. Lots
of previously priced out Vancouverites may now be able to afford to buy a
home in Vancouver! Prices are falling and if you look hard enough you
can find some excellent buys, however you may want to sit on your hands
for a while longer.

For now let’s all enjoy the holiday season!
There are some serious sales going on this season and not only on houses
and condos:). Have a Merry Christmas and happy holidays.

Months of Inventory (MOI) Sucks to be Squamish

Listings +76% YOY

Sales -70% YOY

UPDATE

Prices
are falling sharply. Believe it or not the average SFH price fell 10%
this month. Yes in 1 month. $745,778 for November v. $825,206 for
October. The average has dipped 19% since March. It will be interesting
to see if the benchmarks also make a dramatic drop.

Monday, September 29, 2008

Unfortunatly
our real estate market reality is pretty dull. More of the same market
trends we've seen over the last many months: high inventory,lower sales
and falling prices. Inventory has roared to 21,002 listings(+72% YOY)
and sales continue to be well off from last year but an improvment MOM
at 1619( -45% YOY). The MOI (months of inventory)has also stayed very
high at 13 months compared with 4.4 months last Sept.

INVENTORY

SALES

MOI

Do
you think that the stock market bloodbath will have any affect on our
local real estate? Will investors sell in fear of a global recession? Or
perhaps put money back into tangible assets like real estate?

Monday, July 21, 2008

We just hit 20,000 listings in the REBGV and the trend would point to
even more homes for sale this fall. Currently were up over 60% in YOY
inventory and on track for 70%+ by month end. We saw prices decline last
month and many feel prices are destined to continue moving downward. We
will likely see well over 8 MOI (months of inventory) at month end
compared with 3 MOI at the end of last July.

Is this a good
thing or a bad thing? Does cheering a price correction make you a
pessimist? I guess it depends entirely on your current position.

One
thing is for certain, home prices we're growing at a rate that could
not be sustained. Now our market is re balancing. I personally would not
want to be holding a bunch of pre-sales right now.

What does this mean for buyers and sellers?

Sellers:

Price sharply. Don't get greedy.

Buyers:

Prepare to hold long term, and take this opportunity to negotiate favourable terms.